Business model of Twitter under Elon Musk

Twitter’s Business Model: From Social Soapbox to Monetization Machine

Once a quirky microblogging platform known for real-time updates and quirky hashtags, Twitter, now rebranded as X by Elon Musk, is undergoing the most radical transformation in its history. Acquired for $44 billion in October 2022, the company that once struggled to turn a profit despite its cultural influence is now being retooled into an all-in-one everything app: a fusion of social media, payments, news distribution, and creator economy dynamics.

While Musk’s takeover was polarizing, with advertisers fleeing and users skeptical, the long-term ambition was never about maintaining the status quo. It was about rebuilding the foundation and reshaping the business model of Twitter from a primarily ad-supported ecosystem to a diversified revenue powerhouse.

In this feature, we dissect the multifaceted components of Twitter’s evolving business model, exploring how it generates revenue, reduces dependence on ads, leans into subscriptions, and positions itself as a contender in digital payments and creator monetization.

Twitter’s Business Model: A Brief History of Twitter’s Monetization Struggles

Before diving into Musk’s new paradigm, it’s essential to understand Twitter’s historical business woes. Unlike Facebook or Google, which built robust advertising ecosystems and user targeting tools, Twitter lagged behind. It often monetized influence without capturing the bulk of the value. Despite hundreds of millions of users and being the epicenter of breaking news and social commentary, Twitter never cracked the code to consistent profitability.

Its ad revenues were modest in comparison to rivals. In 2021, the company posted just over $5 billion in revenue, 89% of which came from advertising. But its ad tech lacked sophistication, its targeting capabilities were weaker, and most importantly, it struggled with scale and advertiser trust.

Enter Elon Musk, promising not just a cleanup of bots and content moderation policies, but a sweeping overhaul of how Twitter makes money.

Twitter’s Business Model: A Rebrand, a Rethink, and a Revolution

Shortly after acquiring Twitter, Musk began slashing costs, removing executives, eliminating redundant departments, and rebranding the company to X, a nod to his earlier ambitions for an “everything app.” The goal? Create a leaner, faster, more user-centric platform while radically shifting the company’s monetization strategy.

At the heart of Musk’s reimagination is a transition from reliance on advertisers to a multi-pronged revenue architecture, one that includes paid subscriptions, data licensing, payment rails, and AI integrations. The business model is no longer about selling ads alone; it’s about building a financial and cultural operating system for the internet.

Twitter’s Business Model: The Blue and Verified Accounts

One of the first steps toward this new business model was the rollout of Twitter Blue, a premium subscription tier that offers users a blue verification badge, longer tweet lengths, priority in replies, reduced ads, the ability to edit tweets, and access to exclusive features.

Initially priced at $8 per month (and more for iOS and Android users due to app store fees), Twitter Blue signaled Musk’s intention to extract value from users themselves rather than advertisers alone. Though adoption has been slower than expected, the company has claimed millions of paid users, generating steady monthly recurring revenue (MRR) and reducing the platform’s dependency on volatile ad dollars.

Verification as a Service

What was once a merit-based blue checkmark became a paid feature under Twitter Blue, democratizing the process but also blurring the lines of authenticity. Critics argue this has diminished trust, but from a business model perspective, it enabled a new form of monetization: identity and reach as services. This pivot from “ad revenue per eyeball” to “subscription revenue per influence-seeker” illustrates a core shift in the value proposition Twitter offers its users.

Twitter’s Business Model: Leaner, Smarter, and More Controversial

Despite Musk’s stated goal of reducing reliance on advertising, it remains a major revenue source, especially programmatic ads and promoted content. However, the nature and scope of Twitter’s ad business have changed dramatically post-acquisition.

Upon Musk’s takeover, brands like General Motors, United Airlines, and Coca-Cola pulled back due to concerns over content moderation, political bias, and user verification changes. Reports indicate Twitter lost up to 60% of its top advertisers by early 2023, forcing a rethink of its brand safety protocols and advertising models.

To stem the loss, Twitter offered generous ad incentives, lower CPMs, and even equity-based incentives to entice brands back. Additionally, it began courting smaller businesses and direct-response advertisers, creating tools for SMB ad campaigns similar to Meta’s Business Manager.

Contextual and Creator-Focused Ads

A noticeable shift has been the emphasis on contextual advertising and creator-centric ad monetization, which allows advertisers to target audiences based on interests and tweet topics rather than hyper-granular personal data. This approach respects user privacy while enabling advertisers to connect with relevant communities.

Musk has also promoted the idea of revenue-sharing with creators, incentivizing high-engagement users to remain on the platform and contribute premium content that supports ad ecosystems.

Twitter’s Business Model: Creator Monetization and the Rise of Longform Content

In a surprising twist, Twitter is becoming a creator platform, supporting longform posts (up to 25,000 characters), video uploads, and monetization tools. Verified users can now place content behind paywalls, earning income from subscriptions and tips, features that mimic OnlyFans, Patreon, and Substack.

By enabling text, audio, and video monetization, Twitter seeks to capture value from the creator economy, which is estimated to be worth over $100 billion globally. Journalists, influencers, educators, and comedians are increasingly using the platform not just to promote content, but to host it. Musk’s pledge to offer creators a higher revenue share than YouTube, reportedly 90%, aims to make Twitter a true home for independent publishing.

Twitter’s Business Model in X Payments: Musk’s Fintech Ambitions Take Shape

Perhaps the most ambitious piece of the puzzle is Twitter’s foray into financial services. Under Musk, Twitter has begun applying for money transmitter licenses across U.S. states, hinting at a future where the platform supports peer-to-peer payments, tipping, e-commerce, and potentially crypto transactions.

This echoes Musk’s long-standing vision of X.com, the online bank he founded before merging it with Confinity to create what became PayPal. The idea is to transform Twitter into a financial utility—a digital wallet layered with social capabilities.

If executed well, this would allow Twitter to:

• Facilitate direct payments between users and businesses

• Introduce tipping features tied to content

• Launch loyalty programs and tokenized assets

• Integrate with global remittance and banking networks

This would create a whole new revenue stream through transaction fees, float income, and fintech partnerships. And crucially, it would make Twitter not just a social app but a financial app, unifying commerce and conversation.

Twitter’s Business Model: Data Licensing and AI

Another often-overlooked but powerful revenue lever for Twitter is data licensing. The platform’s real-time data, known as the Twitter Firehose, is gold for hedge funds, researchers, sentiment analysis firms, and now, AI companies.

Musk recently restricted free access to Twitter’s API, instituting paid tiers for commercial use. This has impacted bots and third-party clients but opened up a monetizable stream of revenue that charges based on access volume and query limits.

With AI becoming data-hungry, Twitter’s massive corpus of conversational data is a high-value commodity. It could monetize access through licensing to LLM developers, NLP research firms, and enterprises seeking insight into human interaction and real-time sentiment.

Twitter’s Business Model: Cost Reduction and Automation

Much of Musk’s strategy revolves around reducing Twitter’s bloated cost structure. Through aggressive layoffs, cutting over 75% of the workforce, Twitter now operates with a skeleton crew, relying more on automation and open-source development to maintain features.

While this sparked concerns about platform stability and moderation, it significantly improved Twitter’s operating margin, allowing it to experiment with new features without burning through cash at the previous rate.

Additionally, Musk has relocated teams, consolidated office space, and slashed executive salaries, all part of a broader playbook to turn Twitter into a lean startup with global impact.

Twitter’s Business Model: The Role of AI and Grok

Elon Musk’s ambitions for AI are no secret. Through xAI, he has launched Grok, an AI chatbot that integrates directly into Twitter’s interface. This serves multiple goals:

• Enhancing user engagement through conversational interfaces

• Collecting structured feedback from user-AI interactions

• Creating premium AI features for verified users

• Positioning Twitter as a hybrid platform for content and cognition

Grok could evolve into a monetizable feature akin to ChatGPT, especially if paired with premium access models or enterprise tools.

Regulatory, Legal, and Brand Challenges

Of course, transforming Twitter into a fintech and content platform doesn’t come without regulatory scrutiny. The company is under constant pressure from:

• The FTC and European regulators over data privacy and content moderation

• App stores (Apple, Google) over payment bypasses and revenue share conflicts

• Lawsuits from former employees over mass terminations and stock options

These challenges pose reputational and financial risks, but they also underscore the disruptive nature of Musk’s business model—one that seeks to move fast, break things, and rebuild.

Twitter’s Business Model: From Tweets to Transactions, Twitter’s Evolution Into X

Twitter is no longer just a place for 280-character updates. Under Elon Musk’s radical leadership, it is morphing into a digital economy in itself, where attention, identity, payments, and information flow converge. The business model has shifted from an ad-funded social network to a multi-layered platform business: part subscription model, part data marketplace, part fintech infrastructure, and part creator economy engine.

The transformation is far from over, and success is not guaranteed. But if Musk succeeds, Twitter, now X, could become the most ambitious reinvention of a social media platform ever attempted, blending the immediacy of communication with the utility of financial services and the creativity of content.

It’s no longer just about tweeting. It’s about building the next digital frontier, one transaction, one subscription, and one creator at a time.

(Business Upturn does not guarantee the accuracy of information in this article)